Retirement Readiness: A $50,000-Per-Employee Business Risk Leaders Can't Ignore

For many employees, the dream of a secure, comfortable retirement feels increasingly out of reach. Rising living costs, persistent inflation, and the decline of employer-sponsored pensions have reshaped retirement into a personal responsibility -- and a growing financial stressor.

The data tells a sobering story:

• 42% of Americans have dipped into their retirement savings due to inflation
• 69% have reduced contributions due to higher costs
• And each year of delayed retirement costs employers more than $50,000 per employee

Meanwhile, millions (especially baby boomers) are delaying retirement or returning to the workforce to stay afloat. These trends do not just impact individuals. They carry real consequences for workforce planning, healthcare costs, talent mobility, and overall productivity.

The good news? HR and benefits leaders have an opportunity to change the trajectory.

What Is the Retirement Readiness Gap?

The retirement readiness gap refers to the disconnect between how prepared employees think they are to retire and their actual financial capacity to do so.

Even employees who contribute to a retirement plan may be unprepared due to:

• Inadequate or inconsistent savings
• Rising healthcare costs in retirement
• Unforeseen emergencies or persistent debt
• Increased life expectancy and longer retirements
• A lack of understanding around how much is truly needed

The retirement readiness gap is not just an employee problem; it is a bottom-line business challenge that is costing organizations tens of thousands per employee while creating significant operational risks.

Why Retirement Readiness Demands C-Suite Attention

When employees cannot afford to retire, the impact to business is immediate and costly:

• Escalating healthcare costs for older employees
• Stagnant career growth for younger talent due to delayed retirements
• Higher payroll expenses from tenure-based raises
• Productivity loss due to financial stress
• Disrupted workforce planning, especially during economic uncertainty

Financially stressed employees are also more likely to be distracted at work, disengaged, or actively seeking new employment, creating additional costs in turnover and lost productivity.

What Employers Can Do: 6 Strategic Actions to Drive ROI Through Retirement Readiness

1. Offer Financial Wellness Programs That Prioritize Retirement Planning

A modern financial wellness program goes far beyond 401(k) education. It's a proactive, personalized support system that helps employees model retirement scenarios, optimize savings, and make smarter decisions with confidence.

Best-in-class programs offer:

• Personalized guidance based on life stage, income, and benefit eligibility
• Interactive tools that model savings gaps and milestones
• Access to Certified Financial Planners (CFP®s) and AI-powered coaching
• Education around HSAs, IRAs, Social Security, and employer-specific benefits

This kind of holistic support helps employees take action and helps companies maximize ROI from existing benefit investments.

2. Promote Better Utilization of Existing Benefits

Just because you offer retirement benefits does not mean employees understand how to use them effectively. Many are confused by contribution limits, unsure about investment options, or unaware of employer match opportunities.

Help employees get more from what is already available:

• Regularly highlight match contributions year-round (not just during open enrollment)
• Eliminate jargon and simplify plan explanations
• Send nudges around deadlines, milestones, and tax-saving opportunities
• Integrate retirement education into onboarding and performance reviews

3. Support Employees Through Financial Milestones

Big life changes (marriage, having children, turning 50) are moments when employees are more open to financial guidance. These events are perfect opportunities to reinforce long-term financial planning.

Employers can support workers during financial milestones by offering targeted support:

• Contribution adjustments after raises or promotions
• Catch-up contributions for workers over 50
• Planning for healthcare costs in retirement
• Understanding loan or withdrawal penalties

4. Address Retirement Disparities Across Your Workforce

Retirement readiness gaps disproportionately affect women (who save less than men, with 57% of women saving less than 10% of their income vs. 39% of men), workers of color, and lower-income employees, creating potential retention and DEI challenges.

As part of your DEI strategy:

• Create inclusive, tailored education that reflects diverse financial realities
• Ensure all employees have equitable access to tools and guidance
• Use segment-specific communication to reach underserved groups

5. Encourage Mid-Career Check-Ins

Employees in their 30s and 40s may not feel retirement is urgent, but this is exactly when small decisions have the biggest long-term impact.

Introduce resources such as:

• Annual "retirement readiness" reviews or financial check-ins
• Personalized alerts based on project gaps
• Workshops and webinars tailored to mid-career employees

Helping employees course-correct earlier makes retirement more achievable and reduces stress later.

6. Champion Financial Readiness from the Top

Retirement support should be modeled and prioritized at the leadership level. When executives treat financial wellness as a strategic investment, it signals long-term commitment to employees.

This means:

• Allocating budget for meaningful financial wellness tools
• Encouraging leadership to speak openly about retirement planning
• Framing financial wellness as part of total rewards and culture, not just a perk

Final Thoughts: Retirement Readiness is a Business Issue, Not Just a Personal One

The retirement readiness gap is more than a personal financial concern; it is a business challenge with real operational costs. Delayed retirements, disengaged employees, and missed planning opportunities all contribute to workforce inefficiencies that companies can no longer afford to ignore.

By taking a proactive, inclusive approach to retirement planning through education, tools, and personalized support, HR leaders can reduce financial stress, boost engagement, and improve long-term organizational outcomes.

The question is not whether you can afford to support employee retirement readiness. It is whether you can afford not to.